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Principles and Actions:Copper in Chile, Codelco
&Sustainable Development
Isabel MarshallVice President for Quality,
Marketing and Sustainability
Codelco
April - 2004April - 2004
•• Concepts on SustainableConcepts on Sustainable
Development (SD) & MiningDevelopment (SD) & Mining
•• The Business CaseThe Business Case
•• Chile: Mining and SD PerformanceChile: Mining and SD Performance
•• Codelco: Beyond StatementsCodelco: Beyond Statements
Introduction
Sustainable Development
* The Bruntland Definition from the 1992 Rio Summit
““development that meets the needs ofthe present without compromising the
ability of future generations to meettheir own needs”*
–– Integrates social, economic and Integrates social, economic and
environmental goalsenvironmental goals
–– Supports development to meet the needs of the Supports development to meet the needs of the
presentpresent
–– Current generation must not compromise the Current generation must not compromise the
ability of future generations to meet their ownability of future generations to meet their own
needsneeds
• Some believe that minerals and metals are part of the problem, notthe solution: environmental & social impacts, with little or nileconomic benefits
• Mining would be un-sustainable per se, since the resource is notrenewable
• In the case of mineral resources, however,
– new geological discoveries continue to add to world mineralreserves;
– moreover, many mineral commodities, especially metallic mineralproducts, can be recovered after use and recycled
• It is essential that depleting mineral assets be used to generate newwealth which, in the form of useful lasting capital, can benefitpresent and future generations
Sustainable Development &Mining
Mining’s role
• Creation of new wealth
– Jobs, taxes and economic growth– Foundation for eliminating poverty– Enhanced standard of living
• Providing mineral-based products to meet society’sbasic material and energy needs and demands
– Building blocks of economic growth– Metallurgical and technological advances have provided
advances to civilization
Mining’s Role
• Mitigation of mining’s impact on the environment
– Modern mines are designed and built for closure– Mineral products are compatible with environmental
protection– Recyclable mineral products
• Efficient use of resources – energy, water, land andminerals
– Technological improvements promote resourceconservation and efficiency, and extend mine life
Copper & SD
• Copper is a creator of new wealth: the case of Chile
• Copper provides mineral-based products to meet society’s needsand demands
• Copper production is compatible is with environmental andhealth protection
• A recyclable mineral product: high rate of recycling: >50% indeveloped countries
• Copper allows an efficient use of energy
• Copper is an essential nutrient: required by humans and allliving species
• WHO: higher risk for human health from deficit than fromexcess of copper
•• Concepts on SD & MiningConcepts on SD & Mining
•• The Business CaseThe Business Case
•• Chile: Mining and SD PerformanceChile: Mining and SD Performance
•• Codelco: Beyond StatementsCodelco: Beyond Statements
Industry Is Changing
• Historically, companies were expected to meet their
responsibilities to their employees, their shareholders,
and the regulatory authorities
• Today increasingly it’s in a company’s financial interest
to strive for good environmental, economic, and social
performance
• SD: a good business? From cost reduction to a value
maximization approach
The Business Case for SD (I)
• Access to markets and consumers:
– Markets that are increasingly demanding
– SD based regulations that limit market access
– The possibility of differentiating our products: CertificationSystems (ISO 14,001; OHSAS 18,001; SD ISO?)
• Access to financial and natural resources
• Project feasibility, access to business & NPV
• Savings & recycling of resources (energy, water) andwastes
The Business Case for SD (II)
• Financial risk
• Investor preferences and requirements
• Integral control of quality and production cycle fromexploration to customer satisfaction
• Quality & satisfaction of labor force
• Security, risk control, occupational health: lower healthcosts
• Technological innovation, environment & productionefficiency
• Lower closure costs
•• Concepts on SD & MiningConcepts on SD & Mining
•• The Business CaseThe Business Case
•• Chile: Mining and SD PerformanceChile: Mining and SD Performance
•• Codelco: Beyond StatementsCodelco: Beyond Statements
Chilean Mining& Environment
• The Chilean mining industry has been the leader in theenvironmental performance
• Large scale mining has decisively cooperated in thedevelopment of our environmental regulations
• Large mining companies have their own environmentalstandards, often more demanding than the Chilean regulations
• Environmental policies, programs and practices are integratedas an essential management element
• The mining industry has lead the implementation ofenvironmental management systems during the 90s
– Environmental Impact Assessment System (EIAS)
– Pollution abatement plans in copper smelters
– Voluntary commitments to international standards (ISO 9,001
and 14,001)
– Mine closure plans
– Framework Agreement for Clean Production (Chilean Mining
Council with government authorities)
– Voluntary company initiatives
– Environmental Reports
SD & Chilean Mining Sector
Investment submitted toEIAS by sector (to 2002)
639
711
204
345
558
8,676
2,850
4,232
7,934
6,221
2,976
4,086
US$17,403
0 2.000 4.000 6.000 8.000 10.000 12.000 14.000 16.000 18.000 20.000
Environmental cleaning
Fishing and see food
Others
MINING
Textile facilities
Building
Port infrastructure
Hydraulic infrastructure
Transport infrastructure
Forest
Equipment
Energy
Farming and livestock
Million US$
Total: US$56,840
Reduction of SO2 emissionsfrom Chilean copper smelters
• SO2 emissions were reduced 64% according to plans, despite the fact that smelter production increasedslightly in this period.
• Arsenic emissions were reduced from about 4,600 tons in 1998 to 2,064 tons in 2001.
Copper smelter production
0
200
400
600
800
1000
1200
1400
1600
1800
2000
1993 1994 1995 1996 1997 1998 1999 2000 2001 20020
500
1000
1500
2000
2500
3000
3500
4000
4500
SO2 emission Sulfuric acidproduction
Thousands metric tonsSulfuric
acidSO2 emission
&Copper smelter
production
• People who work in large - scale mining are a keyfactor in the development and success of thecompanies:
– The mining industry offers top quality jobs, salaries and fair
compensations
– The highest unionization rate in the country
– High levels of training and technical abilities
SD & Chilean the Mining Sector
UnionizationPercentage
0
10
20
30
40
50
60
70
80
Mining CouncilCompanies
National AveragePe
rcen
tage
(%)
0
5.000
10.000
15.000
20.000
25.000
30.000
35.000
Mining CouncilCompanies
National Average
Inco
me
(US$
)
Annual Average Income
Average Years of Studies
0
2
4
6
8
10
12
14
Mining CouncilCompanies
National Average
Yea
rs
0
100
200
300
400
500
600
700
Mining CouncilCompanies
National Average
(US$
)
Investment in Training
• Communities, economy & society
– Chile, where mining is a crucial sector of the economy, is now
among the group of ‘high human development’ countries (UNDP).
– Chile has a state owned and managed copper stabilization fund,
into which it saves part of state-copper revenues during high
price cycles, and spends out of it during depressive cycles.
– The mining boom explains 10% of the overall per capita GDP
increase of Chile during the 1990s, and salaries in mining double
the national average (CIPMA 2002).
SD & Chilean the Mining Sector
Poverty & Education
National Average
Local Average
Primary Education 2000%
Yea
rs
Poverty percentage over population, I,II,II y IV regions
•• Concepts on SD & MiningConcepts on SD & Mining
•• The Business CaseThe Business Case
•• Chile: Mining and SD PerformanceChile: Mining and SD Performance
•• Codelco: Beyond StatementsCodelco: Beyond Statements
Introduction
“ This Corporation has embraced the principles ofsustainable development and views them as anessential part of its business project. Proof of this isthe approval during this year of the corporate policyon sustainable development, which contains thevision and commitment of Codelco with specificeconomic, social and environmental goals”
Juan Villarzú, President & CEO
Codelco’s Environment & Community Report
2003
Codelco’s Strategy
Return onAssets
HumanDevelopment
SustainableDevelopment
ValueCreation
Activities/ years 1994 1995 1996 1997 1998 1999 2000 1994-2000
Smelter Decontamination Plans
39.8 70.8 52.5
85.6 71.0 46.9 366.8
Tailings managment
12.7 25.1 49.5 68.4 93.1 44.4 11.1 304.3
Other Projects
26.5 14.7 12.5 16.3 11.6 12.7 6.8 100.9
Total (US$ Millions)
39.1 79.6 132.8 136.5 190.3 129.1 65.5 773.0
Environmental Investment (Millions of US$)
Figures for 1994-2003 are expressed in 2003 currency value
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Total
45 80 59 97 81 51 47 165 33 658
14 28 56 77 105 50 12 1 12 4 359
30 17 14 19 13 14 8 3 12 3 133
44 90 150 155 215 145 71 51 189 40 1150
SO2 Emissions and Reduction Plansfor Codelco’s Smelters
0
20
40
60
80
10019
83
1986
1989
1992
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Year
Energy consumption
RT
3250
3300
3350
3400
3450
3500
3550
3600
3650
MWh/Ton cobre fino
1995 1996 1997 1998 1999 2000
año
MWh/MFT
Year
3250
3300
3350
3400
3450
3500
3550
3600
3650
MWh/Ton cobre fino
1995 1996 1997 1998 1999 2000
año
MWh
/Mft
Year
RT
Water discharges(1995-2006)
0%
20%
40%
60%
80%
100%
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
Years
% M
anag
emen
t Eff
icie
ncy
National water discharge standards issued
Corporate Guidelines
Compliance withregulations
Optimization
Water resources guidelines
LocalMgmt.
DivisionalIntegratedMgmt.
CorporateIntegrated Mgmt.
High level performance
Solid Wastes(1995-2006)
0%
20%
40%
60%
80%
100%19
95
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007 Years
% %
Man
agem
ent E
ffic
ien
cy Corporate Guidelinesfor Solid Wastes
Divisional guidelinesFor Solid Wastes
Solid Waste Management Centers
Minimization plans
Site recoveries (start-up)
Management Plans for Solid Wastes
LocalMgmt.
DivisionalIntegratedMgmt.
CorporateIntegrated Mgmt.
High level performance
CodelcoSD Policy
Codelco SD Policy
•• Corporate SD Policy approved by the Executive CommitteeCorporate SD Policy approved by the Executive Committeein mid 2003:in mid 2003:
– It highlights the relevance of the dialogue with the internal andexternal stakeholders
– It states and formalizes the corporate commitment on valuesand ethical business aspects, such as the respect and protectionof fundamental human rights and the dignity of all individuals.
– The policy provides a broad conceptual framework, givingstrategic orientation and reinforcing a number of specificexisting policies, guidelines and standards related tosustainability
• Ethical and responsible practices of business; humanrights and dignity of the workers of its operations
– A framework of existing policies, guidelines, norms &
controls mechanisms
– Joint work & agreement of management & workers´unions:
an ongoing initiative since 2000. Joint development of a vision,
mission, values, management style & strategic priorities
– Values: dignity, mutual respect, participation, responsibility,
trust, ethical behaviour, transparency, honesty, fairness, social
responsibility, solidarity, loyalty, integrity, commitment
Principles & Actions
• Criteria of sustainable development in the decisions ofthe company & systems of management, of environment,safety, occupational health & community relations
– Performance Agreements (Balanced Scorecards): SD variables since1993, linked to incentives
– Policy (2001) on Environment, Security & Occupational Health
– ISO 14,001 Certification (2003) - the whole Corporation is certified
– Decision (2003) to certify under OHSAS 18,001 by 2005
– Integral management of quality, environment, security, occupationalhealth & community relationships (ISO criteria)
– Voluntary Environmental Agreements (regional working committeesin our operations with local governmental authorities )
Principles & Actions
• Conditions for the development of the neighboringcommunities
– Perception study
– Sustainable Codelco Index/operations’ performanceagreements
– Pro-regional Corporations (all Divisions)
– Good Neighbor programs
• To communicate, to inform and to report opportunely andtransparently on its performance
– Membership and participation in WBCSD and GRI
– Since 1999: Annual Environmental Report (using GRI), with
goal of external auditing in 2005
Principles & Actions
• To stimulate environmentally responsible production anduse of products during their whole life cycle & to contributewith scientific information that can help develop sound andappropriate regulations with respect to copper
– On-going study: Life Cycle Inventory and Evaluation ofCodelco’s Commercial Products
– The environmental program of ICA/IMOA
– Active participation in national & international regulatorydiscussions, directly and with government authorities and othercompanies
• To promote this Policy between all those are related to thecompany’s operations
– Codelco’s internal and external communication strategy
– Environment & Community reports
Principles & Actions